The London Collective Investment Vehicle (CIV) has received full authorisation from the Financial Conduct Authority (FCA), it announced today.
The collaborative venture established by London Councils on behalf of the 32 London boroughs and the City of London Corporation, has become the first such scheme to be fully authorised in the UK by the financial regulator.
London CIV claims the vehicle will enable the London authorities to achieve “unprecedented economies of scale and potentially enable access to opportunities for investment in alternative asset classes that may not have previously been easily achievable for individual funds”.
It said the platform was also a “proactive response” to the government’s LGPS pooling agenda to create six British Wealth Funds of around £30bn each, announced by Chancellor George Osborne in the last Budget.
So far 29 of London’s boroughs as well as the City of London are signed up to the platform out of a possible 34 schemes.
London CIV chief executive Hugh Grover (pictured) said: “It has been a real privilege to be leading this ground-breaking project on behalf of the London boroughs. We are now focused on opening our first sub-fund before Christmas and will open a further eight sub-funds by the end of this financial year, giving us around £6bn of assets under management. Overall the boroughs have some £25bn of assets and throughout next year and beyond we will be opening more sub-funds covering the full spectrum of asset classes in response to the boroughs needs.”
The CIV is structured as an authorised contractual scheme (ACS), an FCA-regulated tax-transparent fund domiciled in the UK. The organisation will operate as an authorised fund manager with an authorised fund underneath.
The umbrella fund will have a range of sub-funds underneath, each run by a delegated fund manager covering different asset classes and strategies.
The first fund on the platform is a £0.5bn active global equities fund managed by Allianz Global Investors.
London Councils chairman Jules Pipe said: “London local government has been leading the way in developing proposals for greater collaboration across the Local Government Pension Scheme. I am extremely proud of what has been achieved by everyone involved in setting up London CIV, which is already delivering significant financial benefits for the boroughs, the pension scheme members and local tax payers.”
Last month, in an interview with portfolio institutional, Grover explained by the end of launch the CIV would have four managers and nine sub-funds: six passive equity; two active global equity and one diversified growth fund.
He added: “Beyond that, we will grow out with whatever the boroughs want us to put on the platform. We will be authorised to invest in any asset class so we will quite quickly move into fixed income and undoubtedly in the future we will look at property, private equity, etc. Basically, you name it we are likely to be looking at it.”
Elsewhere, the London Pensions Fund Authority (LPFA) and Lancashire Pension Fund are also awaiting FCA authorisation for their £10bn partnership, the London and Lancashire Pensions Partnership (LLPP).
Look out for an interview with LPFA chief investment officer Chris Rule and investment committee chairman Tony Dalwood in the January/February issue of portfolio institutional.
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